Mary Harney (Dublin Mid West, Progressive Democrats)

I propose to take Questions Nos. 72, 77 and 80 together.

In designing the package of measures announced on 19 November the Government considered several options and consulted widely. I consulted with the Health Insurance Authority, which has a statutory duty to provide me with advice on the private health insurance industry. In addition, either I or my officials met with each of the three existing insurers in the market before these measures were announced. Given that there is no consensus in the industry on how the differential cost profiles of the customers of the companies can be reconciled to underpin community rating, the Government ultimately had to take the decision on what needed to be done to protect the interests of older people and to ensure they could continue to afford good quality health insurance cover. Meetings have been held with the three major insurers in recent weeks. There will be continuing contact with the companies on administrative arrangements for the implementation of the measures.

In themselves, the measures should not lead to an overall increase in the €1.5 billion in private health insurance premiums paid by all consumers because the new levy on health insurance companies will yield approximately the same amount as the enhanced tax relief for those aged over 50. However, I emphasised that it would be a commercial decision for individual health insurance companies as to how they chose to reflect the overall impact of the measures in setting their premiums. I wish to make it clear that the levy is not being imposed on the individual policy holder but on the companies. It is a commercial decision for each company whether they pass on any or all of the levy to their customers.

Since I last answered questions on this matter, Quinn Healthcare and the VHI announced price increases for customers taking out or renewing policies from 1 January 2009. Quinn Healthcare is increasing prices by an average of 16%. The VHI increases average 23%. Hibernian Healthcare has not announced any increase to date. It is a matter for the individual companies to explain and justify the levels of the increases they are introducing. There are several underlying cost pressures in private health insurance, including medical inflation, the ageing of the insured population, increased numbers of procedures, and greater economic pricing of public hospital services to insurers.

I hope that young people and families will not leave the market. Health insurance cover in Ireland represents good value for all age groups. The Government will bring forward the lifetime community rating regulations for enactment in early 2009. These will provide a powerful incentive for people to take out insurance cover earlier in life and to retain it. Anyone inclined to cancel their insurance now should consider carefully that they may have to pay a higher premium in order to re-enter the market at a later date.

While the amount raised in the levy on companies is intended to equal the cost of the age-related tax reliefs, the moneys collected from the levy will not be ring-fenced because the two measures are being introduced by amendments to two different pieces of legislation. It is a long-standing convention in our tax code that we do not have hypothecated taxes which are raised and ring-fenced for specific purposes. The moneys raised from the levy will accrue to general Exchequer funds and, likewise, the cost of the new age-related tax reliefs will be met from general Exchequer funds. In designing these measures, the Minister for Finance and I made it clear that the combined effect of these measures on the Exchequer, should, as far as is practicable, be neutral. I expect that the amending legislation will be published in the new year.

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